The disadvantages are very serious because it will directly harm our pockets in exchange for the immediacy:
* The interest rate may be excessively high, especially if you put it in comparison with other types of credit. The interest rate can be as high as 25% APR.
* The repayment plan, the loan repayment levels we are offered is usually not or comfortable and flexible. Comply with tables and time-bound and it is impossible to change. A certain amount incumbent one, two or three possible repayment period (eg 24 and 48 months), but you can not negotiate a different time, even shorter period because they do not offer it.
Example: We do a simulation in loan calculator with the following results:
A $ 3,000 loan at an interest rate of 24.6% APR, the entity can be amortized over 42 months, ie 3 years. The monthly fee would be 107.22 euros, which is quite comfortable, but we have to pay € 1,500 in interest alone, ie, half of what we we paid in interest and in the end we have to pay back € 4,500.
These credit card companies recognize that while much selected granting loans is inevitable to have a high delinquency that can reach 10%. This emergency loan business for many people the last resource and when something fails the risk of default is high.
The experts, as we have seen the disadvantages, warn of the risks of using emergency appropriations to meet the extra costs as they draw on these products not only aggravates the debt overhang. To Adicae (Association of Consumers and users of commercial and savings banks) under these loans are hiding too high interest rates and terms that border on the abusive.
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